The meeting of the Grand Prix Commission last week was primarily aimed at doing a little housekeeping, and tidying up a few loose ends. What emerged from that meeting, and from the previous one held at Valencia a month ago, turned out to be a little more than that. Among the many changes announced were a few that point to the series turning down a new, and more sustainable path.

On reading the rule changes, it is hard to escape the conclusion that the official FIM press release containing the minutes may as well have been subtitled "MotoGP Regulations: The Marc Marquez Edition." Though Marquez is not yet twenty years of age, he has already left his mark on the rulebook, many of the new regulations appearing to have been drawn up in response to controversies emerging (rightly or wrongly) from Marquez and his Monlau Competicion Moto2 team.

The biggest change to the rules is the introduction of a penalty points system, aimed at bringing some clarity and consistency into the way that repeat offenders are treated. The rules arose from the debate generated by the treatment of Marquez throughout the year. The Spaniard received a number of warnings for incidents during the 2012 season, starting at Qatar, and his maneuver which forced Tom Luthi off line, passing through his collision with Pol Espargaro at Barcelona, a collision with Mika Kallio at Motegi, and ending with a penalty for an incident with Simone Corsi at Valencia, where he was forced to start from the back of the grid (the penalty did not slow him up much, he still came through most of the field on the first lap and went on to win the race).

After the incident at Qatar, Marquez was issued a formal warning, which Race Direction referred to informally as a 'yellow card'. That terminology led some, especially outside of the Spanish media, to believe that a following infraction would result in Marquez being suspended for a race - that, after all, is the meaning of a yellow card in soccer, the sport where the terminology is derived from. Marquez never did receive a suspension, and the penalty imposed by Race Direction for his clash with Espargaro was overturned by the FIM Stewards, who viewed the incident in isolation, not taking his previous run-in with Luthi at Qatar into consideration.

The treatment of Marquez - as well as a few other serial transgressors, including riders who had committed serious offenses such as pushing marshals and others - had given the impression that the decisions of Race Direction tended to be rather arbitrary in nature. The very opaque way in which decisions were reached left Race Direction open to charges of inconsistency, and worse, favoritism. It was clear that a much more transparent system was required to manage such infractions, making it clear to everyone where a particular rider stands, and the possible penalty for a subsequent offense.

Hence the penalty points system introduced by the Grand Prix Commission last week. Under the new system, Race Direction can punish any rider deemed to have breached the rules, or shown unsafe or unsportsmanlike conduct, by awarding them a number of penalty points (between 1 and 10) depending on the seriousness of the offense. If the rider has collected 4 or more points, they will have to start one race (the next race) from the back of the grid. If the rider collects more points, and their total reaches 7 points or more, they will have to start one race from pit lane. Once the rider's total reaches 10 points, they will be automatically disqualified from the next race. At this point, the rider's penalty points total is reset to 0, and he starts afresh.

All penalty points are valid for just a single season, however. Any rider finishing at Valencia with 9 points will start the next season at Qatar with a clean slate. This does preclude riders from receiving points for any crimes committed during the final race of the year, of course, though Race Direction still has the option of deducting points, disqualifying riders, and fining them, in addition to awarding points.

Though the new system is a clear improvement, in that now everyone can keep track of which rider has how many points, it still leaves Race Direction open to charges of arbitrary decision-making. Race Direction are free to decide to penalize riders with as few or as many points as they wish. The added transparency of the penalty points system does make it easier to keep track, however, for riders, teams, the media, and Race Direction themselves. Race Direction will now at least have some form of precedent to go by in future, once enough incidents have been judged and penalized.

The transparency benefits the riders, most of all. It is now perfectly clear exactly where they stand, and what risks they are running by any following transgressions. They now have a better idea of when they need to calm down a little, and ride a little less recklessly.

The introduction of a penalty points system was not the only new rule change which brought Marc Marquez to mind. The Grand Prix Commission introduced two new rules in Moto2, one starting immediately, and the other to be enforced from 2014 onwards.

Starting from now, the scrutineers will be stricter on which quick-shifters the Moto2 teams are allowed to use. All systems must now be approved by Danny Aldridge, MotoGP's Technical Director, before they can be used on a Moto2 bike. The controversy surrounding the TSR system used by Marc Marquez (and also adopted by other teams, including Marc VDS Racing, HP Pons Tuenti, and others) has been averted by this measure, it now being perfectly clear whether a system is inside the rules or not. There were those who felt that the TSR system broke the rules, introducing an extra control unit between the standard HRC ECU and the coils, capable of altering the length of time that sparks were cut during gear changes. The rules stated merely that the wiring harness to be used may be altered as teams see fit, as long as it 'respects the official Supplier’s wiring diagram'. That phrasing leaves rather too much room for interpretation, perhaps.

Along the same lines, a new lambda sensor is to be supplied to the Moto2 teams from 2014 onwards. The current lambda sensor appears to be one of the suspects for manipulation: given that the teams cannot design their own fueling strategies to create traction control or increase power, their main focus has been of optimizing the air/fuel ratio under all conceivable conditions, providing the best possible engine response and power delivery. The new lambda sensor should eliminate any vulnerability the current kit may have to manipulation.

The restrictions on quick-shifters and the new lambda sensor will not be met with universal approval. Some Moto2 teams were already expressing their displeasure at Valencia, while discussions were still ongoing. Their objection was that their ingenuity was being punished: they had spent a lot of time and a considerable amount of money figuring out the loopholes in the current regulations, and the (admittedly small) advantage they had gained was now being taken away from them. No doubt that the strongest and best-funded teams will soon find new ways of ensuring whatever small technical advantage they can find in the new rules. Such is the arms race inside any motorcycle racing paddock.

One of the by-products of that arms race is to keep driving costs up, and that too has been addressed. In what promises to be a revolution for the MotoGP paddock, price caps are to be introduced from 2015 onwards on certain key components, starting with brakes and suspension. The price of brakes has been a thorn in the flesh of the teams for many years now, the issue coming to public attention early in the 2012 season, when Monster Tech 3 Yamaha rider Cal Crutchlow started complaining about not having the latest set of Brembo brakes, while his teammate Andrea Dovizioso did have them. Crutchlow alleged that Dovizioso had paid the 60,000 euros the brakes cost himself, and that the only reason he did not have the new calipers was because he was not willing to pay for them out of his own pocket. Eventually, Crutchlow also received the brake upgrade, despite Casey Stoner telling him they didn't offer much improvement. Though team boss Herve Poncharal refused to comment on the issue, sources inside the team hinted that neither Dovizioso nor Crutchlow had had to contribute funds out of their own pocket, the money having come from the team budget.

With brakes running at over 60,000 euros a season, and forks upwards of 30,000 a set, just getting a bike on the grid is an expensive business. With Ohlins and Brembo having established a virtual monopoly in the MotoGP class - the paddock's innate conservatism working against itself once again - competitive pressure on prices is almost absent. Teams pay what the manufacturers ask because they believe that they have no alternative, and because they fear trying to compete on different equipment: if you have the same forks or brakes as your competitor, that is at least one variable which you have eliminated. This then makes it even harder for new brands to enter the sport, as the dominant manufacturers continue to amass mountains of data, while a new entrant has little or none.

The monopoly positions held by Ohlins and Brembo are unlikely to change. Nor is that necessarily a bad thing, as their products are without doubt of the very highest quality. The only complaint which the teams have is the price. If competition will not reduce the price, then imposing price caps is a sensible way to limit costs. It will not necessarily slow development, as Ohlins and Brembo will be free to continue to develop their products as much as they like. If they wish to do so, however, they will have to fund more of the development themselves, and less from income gained from selling to the teams.

This is likely to become the predominant method for cutting costs in the future. After other attempts at cutting costs via the rules have met with at best limited success, and at worst spectacular failure, the simple expedient of defining a reasonable price for a component and ruling that anyone wanting to supply to the series must supply at the specified price, choosing either to build to that price or swallow R&D costs themselves, costs which can be recouped via both marketing exposure in the series and from improved sales of consumer products based on GP technology. This is one way of effectively controlling costs.

Changes to the Moto3 class also underline that this is the strategy of the future for Dorna. Though the first year of the new four-stroke class has been a relative success, the costs of a competitive Moto3 motorcycle are still much higher than the teams and Dorna had hoped. To stop the costs from spiraling out of control, with KTM and Honda vying for supremacy in the class, further price controls are to be introduced for Moto3. The price of engines is already capped at 12,000 euros, but chassis costs are much, much higher, complete with top spec brakes and suspension parts. The price of these parts is to be controlled as well from 2014 onwards, a move aimed at both leveling the playing field - the difference between a standard Honda NSF250R and a GeoTech-prepared engine in an FTR chassis is massive - and at making the series affordable for all of the players.

Another change in Moto3 is the way which engines are supplied. At the moment, each engine manufacturer is supposed to be willing to supply any team that asks them, and make all engine upgrades available to all their customers equally. This has not prevented some teams from having vastly superior parts to others, and so from 2014, all the engines from one manufacturer will be handed over to the series organizer (Dorna) and they will distribute these engines to the teams choosing to use that manufacturer's engine at random. This should reduce the disparity between the teams, and remove the incentive for manufacturers to favor their factory teams.

Engine development is also subject to regulation in MotoGP. An engine freeze had already been announced earlier this year, basically restricting engine development to electronics, exhaust and inlet work, and bore and stroke dimensions fixed for the next three seasons. The Madrid meeting of the Grand Prix Commission confirmed that this engine freeze does not apply to CRT engines, but it also confirmed that factories may homologate different specs of engine for a season, allowing, for example, a satellite team to use a different spec of engine to the factory team. The unfortunate side effect of this regulation is that satellite teams could be given lower-spec engines at the start of the season, leaving them less competitive for the entire season.

The final major change - and a long overdue one at that - is the introduction of a transponder capable of receiving signals corresponding to the flags shown by the marshals, in addition to its usual function in timekeeping. From 2014, this new transponder will be made compulsory, along with forcing the teams to use a dashboard system capable of receiving those signals from the transponder and passing them on to the rider by way of lights, etc. Direct communications with the pits remains illegal, but Race Direction will have the ability to warn riders much more easily. By having the transponders receive warnings for yellow flags, red flags, ride-through penalties, disqualifications, etc, track safety should be much improved. No longer will there be certain corners where visibility of the marshal stations is an issue, with flags only seen in peripheral vision. The trackside flags will not disappear, but having the information quite literally in front of the rider's eyes should make a big difference.

Comments

"The treatment of Marquez - as well as a few other serial transgressors, including riders who had committed serious offenses such as pushing marshals and others - had given the impression that the decisions of Race Direction tended to be rather arbitrary in nature."

Or, indeed, that any decision at all was completely lacking in too many cases.

So Stoner can look back on his EU 5k fine and actually be assured, as he said at the time, that it was worth it to get Race Direction to take some action... even though the thumpee came to his defence before Race Direction. Equally, Lorenzo can feel that his 'racing is NOT a contact sport' was the right thing to say.

Here's an idea for Moto3, if we really want to control costs: Bikes are leased. Each team gets to use two or three bikes each weekend. You have to pay Dorna and tell them which bike you want at the beginning of the season. At each race, Dorna shows up with that number of that brand of bike. Pick two (or three) numbers out of a hat, you get those bikes, you slap your bodywork on them and go racing. End of the weekend, the bikes go back to Dorna.

If teams have the bikes in their possession between races, they will work on them. And they'll spend money on quickshifters and lambda sensors or whatever widget will show a performance advantage.

If you are really dead serious about leveling the playing field and lowering costs, the Red Bull MotoGP Rookies Cup model is the way to go. And I'm really not all that opposed to it in Moto3.

Of course, what would happen is that the well-funded teams would buy a bike, run a test program, figure out what windscreen worked best, which suspension settings worked in what circumstances. Then when they'd show up at the track, they'd be miles ahead of the teams that couldn't afford to do that.

This is a very good appraisal of the rule changes David. Thank you.
There is some fairness in most of this, I feel. However, the actual punishment will inevitably be subjective and will generate controversy. It's part of the fun...
Levelling the technical landscape will always be nigh on impossible though. If you stifle creativity/improvement you take away something from the sport too.
Tweaking the rules at seasons end when an advantage is judged to be against the intent of the rules seems pretty fair to me. The guys spending the big bucks will shrug and focus on the next title. That's life.

MM may have had an 'unfair' advantage but his talent is undeniable and he deserved the wins/title. After wondering if he would ever be able to race again I don't begrudge him that success because he was so good to watch.

If some of this means some guy who is off our radar shows what a great rider/team he is, then that's good too.

Apart from a few instances I have never felt that marshals were receiving undue abuse - is there another cache of anecdotes to uncover/write about?

"all the engines from one manufacturer will be handed over to the series organizer (Dorna) and they will distribute these engines to the teams choosing to use that manufacturer's engine at random" so all the spanish teams will defintely get the best engines then. A * after the engine number or something can help to ensure that the status quo remains undisturbed. Or is that me just being imaginative...

While the appraisal that the rule may leave some satellite teams with lower spec engines is a possibility, it also leaves open the possibility for the factories to test future developments in actual races with the satellite teams. This may put the top satellite teams or CRTs with factory spec engines (like Yamaha's stated intention) in the enviable position of testing the newest spec engines and engine technology in races. It may well be unlikely but the wording of the rule does leave open the possibility.

While I'm not surprised that some riders have pushed, slapped or otherwise assaulted a marshal, I'm surprised to hear they need a penalty point system for this transgression. To me, crossing that line should be met with immediate disqualification and ejection from the track. Here in the States, pushing a ref in the NFL is met with ejection from the game, no questions asked. A fine usually follows. I do think the point system is a step in the right direction for other issues as long as race direction is consistent and dashboard lights will certainly improve safety.

"The monopoly positions held by Ohlins and Brembo are unlikely to change. Nor is that necessarily a bad thing, as their products are without doubt of the very highest quality. The only complaint which the teams have is the price. If competition will not reduce the price, then imposing price caps is a sensible way to limit costs. It will not necessarily slow development, as Ohlins and Brembo will be free to continue to develop their products as much as they like. If they wish to do so, however, they will have to fund more of the development themselves, and less from income gained from selling to the teams.

This is likely to become the predominant method for cutting costs in the future. After other attempts at cutting costs via the rules have met with at best limited success, and at worst spectacular failure, the simple expedient of defining a reasonable price for a component and ruling that anyone wanting to supply to the series must supply at the specified price, choosing either to build to that price or swallow R&D costs themselves, costs which can be recouped via both marketing exposure in the series and from improved sales of consumer products based on GP technology. This is one way of effectively controlling costs."

David, could you elaborate on these two paragraphs a bit more? I am not so sure that I can be as sanguine as you regarding the likely effects of these new price controls on parts by Dorna.

Conventionally, under competitive conditions, a binding price cap (one that falls below the market-clearing or equilibrium level) would result in chronic shortages where excess demand outstrips supply.

Under the conditions in MotoGP, I understand Dorna's position. They see parts and engines suppliers like Ohlins and Brembo as monopolists (or oligopolists at minimum), and wish to prevent competitive bidding wars among the most well-financed teams from encouraging monopolist suppliers from restricting output and getting higher and higher prices. Thus, they group all buyers/teams into a single entity and create monopsony power (single buyer) to counteract the monopoly power of the suppliers. So far, so good. The suppliers likely have few other buyers for top-of-the-line prototype parts, and will thus have to agree to sell at the prices offered by the Dorna monopsonist.

Yet, another way in which sellers to monopsonist buyers can respond to price ceilings is to cut their own costs and reduce quality and/or R&D in some manner to match the new lower and binding price caps. The old adage, "you get what you pay for" may ring true here. That is, what is to prevent racing parts and engine suppliers from cutting R&D to bring their costs in line with the new lower price ceilings imposed by the monopsonist buyer? Your comments seem to gloss over this somewhat by suggesting that they will be able to make up the costs on their own by tapping other sources of revenue from marketing. You do mention "build to cost," which seems to suggest that you understand a possible dynamic at play here, but I'd like more of your thoughts on this.

I suspect that these types of price controls, even when imposed between oligopoly sellers and monopsony buyers, may lead to lower quality relative to what may otherwise prevail, thus reducing the quality of prototype racing at the margin. As such, it may not be such a "sensible way of reducing costs." Tradeoffs inevitable? Who knows what the "right" price will be without the competitive bidding for parts by teams? Thoughts?

Sorry for the pun but don't expect to look at Dorna's rule changes in anything but the light of trying to sell the product of TV viewership to the lowest common denominator. They don't care about quality of components or technology development or which side of the purchasing equation the bias lies on. If it wouldn't cause immediate fan implosion it would be a spec bike series in an attempt to force the racing to be as close as possible.

I agree with your conclusion that Dorna are attempting to break monopoly pricing power by converting MotoGP into a monopsony (for certain parts). To understand the implications of this change in MotoGP, we can examine the effect of existing monopsony within the sport.

Dorna/FIM is basically the sole-purchaser of international prototype motorcycle racing entertainment and competition. What is the impact of Dorna's monopsony in the competitive environment for suppliers of MotoGP bikes? The suppliers deficit spend to acquire wins. Winning is considered by the major manufacturers to be more valuable in the production market than it is in the entertainment market. Given the state of technological restriction in racing, companies have concluded that racing is better for marketing than it is for actual R&D technology. Companies participate only if they have a reasonable expectation of winning and if they have other business activities from which they can derive profits.

Dorna can reasonably expect that price controls will break monopoly pricing power and dampen price discrimination. However, reducing parts sophistication, reduces barriers to entry and barriers to competitiveness for other suppliers like Nissin and Showa. New entrants will surely spark predatory dumping by the major parts suppliers, which will destabilize supply, as witnessed within the MSMA. Predatory dumping in motorsport is double trouble. Traditionally, predatory dumping is used to obtain marketshare and customers. In motorsport, predatory dumping is used to secure wins, which means that the winning suppliers have little or no motivation to supply anyone other than the winning teams (more supply = greater losses). This is the supply shortage you alluded to, but it is derived from the nature of motorsport 'marketshare' (wins), not price controls. As you pointed out, the suppliers can still earn direct profits at lower price by reducing the cost of the equipment. Furthermore, supply restriction was already present when MotoGP had multiple competitors and no price controls.

If multiple suspension suppliers and brakes suppliers populate MotoGP, technological restrictions will probably be utilized (MSMA strategy). If suppliers are spooked by deficit spending, MotoGP may continue with simultaneous monopsony and monopoly at a lower price equilibrium with less sophisticated equipment and a low likelihood of supply shortage. Decision theory with relatively high uncertainty. Companies are risk averse. Is it reasonable to believe they will let things play out naturally or have they already started inking deals?

Regardless of the monopsony/monopoly conundrum, the destabilization in sport is derived from the nature of winning. Winning is not a self-contained absolute, like profitability. Winning is relative. Winning is finite. Winning is derived from your competitors, not from third-party customers who do not participate in the competitive environment. In these ways, winning is similar to balance of trade, imo. Competitive environments based upon balance of trade have traditionally exhibited the attributes of mercantilism, not competitive market-based economies.

Here is the real conundrum, imo. Unlike mercantilism, the on-track losers in MotoGP do not often cease to exist. If MotoGP is valuable, and MotoGP does not make any sense as a mercantile contest, why do the losers withdraw rather than banding together to change the game?

Two interesting points of view in the last two post. I'm certainly curious if the Brembo calipers are $60K because of actual cost(r&d, materials, construction) or because they can charge that. As far as quality dropping drastically due to cost control, there's bound other manufactures that would love to be the supplier of choice in Motogp. That should be enough to keep quality dropping too far. However, as Chris mentioned you should suspend logic upon entering the paddock.

Brembo and Ohlins will be able to sell their products at whatever the price cap is set at with a greater margin for profit because they've already spent the R&D money. They already build MotoGP brakes and suspensions. A new supplier (say Nissin for brakes, because that's the only name I can think of right now) would have to first pay for the R&D that Brembo already has done to match the product Brembo makes, then spend more to make a better product, then sell it for no more than Brembo already is selling for. And they've got to create a service infrastructure to support the teams that switch to them.

Not exactly the economic incentive needed to lure a new supplier into the game.

On the other hand, as David pointed out, that's not necessarily awful. Brembo and Ohlins make some friggin' good s**t, and making their stuff more available won't hurt anyone. But I think it's a step toward MotoGP spec-ing parts.

Then again, I could be wrong. I had my money on Honda bolting from MotoGP after 2013 ...

Racing at this level should have continuous development and introduction of new tech that upsets the playing field forcing other teams to rethink and advance their game.

What Dorna are doing is trying to freeze things. They want to remove innovation in the false name of 'cost saving'. We'll never see another RC166 or RC211V with this management.

The rule book gets thicker and thicker. It's almost like they can't see past next week. Adding knee jerk rules every time one of their cash cow riders gets a pimple or some halfwit thinks about the savings of watering down the drinks.

I dread the next season of 4 cylinder 1000c spec bikes carrying Spanish riders to the podium every week.